Changes in Store for FHA-Backed Loans, Says Commissioner

The Federal Housing Administration has become a lifeline for the flagging housing market. Nearly half of all first-time buyers looked to the agency for home loans in the second quarter of last year. With that kind of demand, is the FHA becoming a risk for the U.S. taxpayers who back it? And what's the best way to address potential pitfalls without derailing the budding housing recovery?

That was the topic of a March 11 hearing by the House Subcommittee on Housing and Community Opportunity as it deliberated on the FHA Reform Act of 2010. At the hearing, FHA Commissioner David Stevens described plans to develop stricter rules for lenders and change rules for borrowers, so the riskiest borrowers have more skin in the game. The changes will have a major impact on the ability of borrowers top get mortgage loans.